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BHPBill - operational review
BHPBill released a operational review for the nine months ended 31 March 2017.
- Record production for the nine month period achieved at Western Australia Iron Ore (WAIO) and five Queensland Coal mines.
- Following 44 days of industrial action at Escondida, copper production guidance reduced to between 1.33 and 1.36 Mt. The commissioning of the Escondida Water Supply project and the planned ramp-up of the Los Colorados Extension project are now expected in the September 2017 quarter.
- As a result of damage to third party rail infrastructure caused by Cyclone Debbie, metallurgical coal production guidance reduced to between 39 and 41 Mt.
- Full year production guidance maintained for petroleum and energy coal. WAIO production guidance narrowed to between 268 and 272 Mt (100% basis).
- At Queensland Coal, the high-return Caval Ridge Southern Circuit latent capacity project was approved and will enable full utilisation of the 10 Mtpa wash-plant with ramp-up early in the 2019 financial year.
- In Onshore US, development activity is increasing with the approval of two additional rigs in the Haynesville, with gas prices hedged to deliver attractive rates of return.
- Divestment of non-core Onshore US acreage is progressing, with the sales process well advanced for up to 50,000 acres of the southern Hawkville. Our Fayetteville field is currently under review and we are considering all options including divestment.
- The Mad Dog Phase 2 Conventional oil development project was approved and a contract was executed with PEMEX Exploration and Production Mexico (Pemex) following the winning bid to acquire a 60% participating interest in, and operatorship, of Trion in Mexico.
- Commercial evaluation of the LeClerc gas discovery in Trinidad and Tobago is ongoing. Drilling of the Wildling appraisal well in the Gulf of Mexico is continuing, which will assist with establishing the scale of the Caicos oil discovery.
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BHPBill - retirement of director
BHPBill and BHP Billiton Plc confirm that Pat Davies retired as a non-executive Director of the company with effect from 6 April 2017. The following information is provided in accordance with section 430 (2B) of the UK Companies Act 2006:
The company's Remuneration Report for the financial year ending 30 June 2017 will include the remuneration earned by Mr Davies during his appointment as a non-executive Director for the financial year ending 30 June 2017.
Mr Davies has not and will not receive any remuneration payments upon ceasing to be a Director of the company other than the company’s normal fees for an independent non- executive Director and fees for membership of the Remuneration Committee and the Sustainability Committee payable for the period from 1 July 2016 to 6 April 2017.
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BHPBill - response to Elliott proposal
The following document has today been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do:
- Response to Elliott Proposals
The document may also be accessed via BHP Billiton’s website - www.bhpbilliton.com
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BHPBill - Elliot proposal
BHPBill notes the publication of a letter from Elliott Associates, L.P. and Elliott International, L.P. (Elliott), which outlines a proposal for changes to the Group’s Dual Listed Company (DLC) structure, asset portfolio and capital management.
BHPBill regularly reviews opportunities to create value. Those reviews have included the key elements of Elliott’s proposal. We have had dialogue with Elliott over many months, consistent with our commitment to shareholder engagement. After reviewing the elements of Elliott’s proposal, we have concluded that the costs and associated risks of Elliott’s proposal would significantly outweigh any potential benefits.
Elliott proposes that the Group replace the DLC with a single United Kingdom domiciled company, with a primary listing in London and with Chess Depository Instruments quoted in Australia on the Australian Securities Exchange. Although we keep the DLC structure under review, we have not yet identified sufficient benefits to outweigh the significant costs which would be incurred in unifying the DLC. Unification of the DLC in the manner proposed by Elliott would require approval by the Australian Foreign Investment Review Board.
Elliott’s proposal includes BHPBill demerging its US Petroleum assets into an entity to be listed on the New York Stock Exchange. Elliott’s demerger proposal is based on a view that investors would ascribe a higher value for these assets in a separately listed entity. There is no obvious discount in BHPBill’s trading multiples relative to the weighted average of relevant mining and oil and gas peers. BHPBill has disclosed the information the market needs to fully value the Petroleum business. BHPBill’s approach is to optimise the long term value of the Petroleum business through operating excellence.
Elliott’s proposal also includes BHPBill buying back shares according to a formulaic approach without regard for the cyclical nature of the resources industry or the returns available from other uses of cash. Consistent with its capital allocation framework, BHPBill assesses the value buybacks could create compared to the competing objectives of strengthening the balance sheet, investing in growth or making additional dividend payments. Since the formation of the DLC in 2001, we have returned to shareholders approximately USD23 billion in buybacks of BHP Billiton Ltd. and BHPBill shares, and approximately USD56 billion in cash dividends.
Since 2013, BHPBill has reduced the number of assets in the portfolio by more than one third, through the demerger of South32 and the sale of over USD7 billion of assets. We have reduced unit costs by more than 40 per cent. Under BHPBill’s updated dividend policy, shareholders now receive a minimum 50 per cent of underlying earnings as a dividend each period. We have introduced a rigorous capital allocation framework, which balances value creation, cash returns to shareholders and through the cycle balance sheet strength in a transparent and consistent manner.
In doing so, we have laid the foundations for the Group to substantially grow the base value of its operations. Elliott’s proposal would put this at risk. The Board of BHPBill will consider further its detailed response to the proposal and will make a further announcement in due course.
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